Political meddling has undermined what should be a purely-nature restorative policy

Done properly, Biodiversity Net Gain can create harmony between housebuilding and nature restoration, writes Elliott Malik from the Conservative Environment Network.

Elliott Malik | Nature Programme Officer

Britain's environment is one of the most nature-depleted on Earth, with one in six native species at risk of extinction. But we cannot rely on already hard-pressed taxpayers to stop this decline.

This is where Biodiversity Net Gain (BNG) comes in: a landmark policy, created by the last Conservative government, which was designed to help stop the decline of nature by leveraging the power of the private sector to fund the restoration our environment desperately needs.

For those unfamiliar with BNG, it requires developers not only to restore any habitats harmed during construction, but to go further, delivering an additional 10 per cent increase in biodiversity.

Developers have two options when it comes to that 10 per cent uplift: on-site, local restoration, or by purchasing credits from landowners who have restored nature off-site through the newly- created natural capital market. If, for whatever reason, developers cannot improve biodiversity through these methods, they can purchase credits from Natural England as a backstop.

It is this innovative, natural capital market that is the key to properly funding nature restoration without further burdening taxpayers. Developers contact landowners and farmers, who identify where nature could be restored, before the two sides negotiate to fund this restoration. Simply put, farmers and landowners have financial incentives to restore nature and support developers to mitigate their impact on the natural environment.

This isn't a small amount of money either; the natural capital market could raise as much as £3bn for nature restoration.

However, BNG has so far failed to live up to its ambitions. Political meddling expanded its original purpose beyond nature restoration. The last government hoped that, by incentivising developers to restore nature on-site, local opposition would be eased, making it easier for developments to get planning permission. Rather than simply highlighting this potential benefit, the government introduced a penalty for developers who used off-site nature restoration by requiring them to go beyond the standard 10 per cent. 

This has created nightmares for developers and undermined BNG. Developers feel strong-armed into doing on-site restoration, which particularly penalises small site and brownfield-focused developers, who struggle to meet their uplift obligations in small areas which can be inhospitable for nature.

Due to these difficulties, many developers have decided achieving uplift is too much hassle, and would prefer to hire teams of lawyers to circumvent BNG obligations. They are finding loopholes too easily, with 89 per cent of all BNG-applicable developments granted exemptions.

This has seriously undermined the off-site credit-reliant capital market, with only £324m of the potential £3bn of BNG credits being raised since BNGs creation.

Despite these serious problems, the answer is not to abolish BNG. Instead, BNG must be returned to what it was meant to be: a purely nature-restorative policy.

Unfortunately, the government has missed a key opportunity to do this. Its recent response to the consultation on improving BNG was lacking, merely tinkering around the edges.

This is why the Conservative Environment Network recently published ‘In Pursuit of Harmony', which, amongst other goals, aims at fixing BNG. It calls for two key measures which will make BNG an effective, nature-restorative policy.

The most important change is equalising the uplift requirements for on-site and off-site BNG credits.

Developers should not be forced to squeeze BNG uplift onto on-site restoration or pay for an uplift when restoring biodiversity elsewhere. They should have the freedom to choose how to restore nature. Make it easier for developers to utilise BNG, and more credits will be created. The more credits circulating, the greater the incentives for landowners to turn low quality land over to nature.

Alongside this, the government should tighten BNG obligations and close the loopholes that developers are exploiting. It is far too easy for developers to abuse BNG loopholes, which wastes time, introduces delays into the planning process, and narrows the pool of participants in the natural capital market.

BNG, done properly, will create harmony between housebuilding and nature restoration. It has the potential to be the largest - and most efficient - funnel for private nature restoration funding in this country's history. It's time to reform BNG and allow developers and landowners to choose how best to restore nature.

First published by BusinessGreen. Elliott Malik is Nature Programme Officer for the Conservative Environment Network.